The United States and Indonesia have agreed to reduce US tariffs on Indonesian goods from 32% to 19%. Officials from both sides confirmed that they finalised the deal during high level talks in Washington.
The agreement marks a major shift in trade relations between United States and Indonesia. Leaders say the move will strengthen supply chains and expand investment.
What the New Trade Agreement Includes
Under the deal, Indonesia will remove trade barriers on more than 99% of American imports. The country will also support over 30 billion dollars in purchases of US goods.
In return, Washington will lower tariffs and grant exemptions on selected Indonesian products. These include clothing and textiles made with US sourced cotton and man made materials.
Indonesia secured tariff exemptions for more than 1,700 products. These cover key exports such as coffee, spices, chocolate, natural rubber, and palm oil. Palm oil remains Indonesia’s top export product.
The White House said Indonesia will open its market further to US standards. These include rules on car safety, vehicle emissions, medical devices, and pharmaceuticals.
Indonesia will also lift restrictions on American goods in agriculture, seafood, healthcare, technology, and the automotive sector. In addition, Jakarta has committed to buying US cotton, soybeans, beef, energy products, and aircraft from Boeing.
Rare Earths and Strategic Cooperation
A key part of the agreement focuses on critical minerals. Indonesia will help US companies develop its rare earth infrastructure. This step will support Washington’s effort to secure mineral supply chains outside traditional sources.
Both governments confirmed that the agreement will take effect in 90 days. They may adjust the terms if both sides agree.
High Level Talks in Washington
The deal was finalised during a visit to Washington by Indonesian President Prabowo Subianto. He attended the first meeting of the Trump led “Board of Peace,” which discussed Gaza reconstruction.
Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto said around 90% of Indonesia’s tariff requests were accepted. He described the agreement as balanced and beneficial for both nations.
Prabowo expressed optimism about future ties. He said the agreement will help reduce Indonesia’s trade surplus with the US.
On the sidelines of the visit, Indonesian and US companies signed partnership deals worth 38.4 billion dollars. These agreements cover mining, textiles, and technology.
